Leading off tonight—well, good evening. I‘m Chris Matthews in Washington. Leading off tonight: Obama meets the country. Tonight, the president addresses a congested Congress and a frustrated country. He need not tell us the state we‘re in. Everyone watching knows that. He needs to tell us that he knows the state we‘re in, this country‘s in, which I believe he knows full well.

More important, he needs to show people, all of us, how his economic policies are working, how they avoided the great depression that loomed as he took the oath of office, how that stimulus money is actually creating real, tangible “you can see them” jobs. He needs to replace faith-based politics with “Show me the money” politics.

Here‘s what we know. The president is expected to push Congress tonight to pass a major jobs bill, and he‘ll try once again to get Republicans to join him in fashioning a health care reform bill that would gain 60 Senate votes in the United States Senate, the 60 votes that are necessary. The president will also call for an end to the “Don‘t ask, don‘t tell” ban on open service by gay people in the U.S. military.

The president met today with network anchors at a noon briefing at the White House. We begin our coverage tonight with David Axelrod at the White House and the president‘s mission tonight. Then the top three things I think the president has to do to get the country believing in him again and in the power of government to work for them.

Plus, the president is going to ask the Republicans to lend him a hand. What will he do to get them to do it? Will they be rational and do the right thing if he proposes it, or will they still want him to fail?

Plus, here‘s a sugar plum for liberals. Next week‘s tea party convention in Nashville may be coming apart over bickering about profiteering—it‘s a for-profit event—and the prospect of a sea of empty seats for Sarah Palin‘s $115,000 speech.

And finally, the latest on that alleged attempt to tamper with Senator Mary Landrieu‘s phones down in New Orleans by the conservative activists whose street theater humiliated ACORN a while back.

We start with the State of the Union and with White House senior adviser David Axelrod. A huge challenge tonight, David, for the president. I‘m sure he knows it. And how does he address the fear out there and the anger over the economy?

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: Well, I think he has to be very honest about it. He certainly understands it, Chris. He traveled the country for two years and he heard people‘s anxieties and concerns, not just—obviously, we hadn‘t had the big crash at that point, which took place in the months between his election and when he took office.

But middle-class people have been taking it very tough for 10 years now, and jobs have been flat, wages have been flat, everything‘s gone up. This is one of the reasons the president ran because those—the middle class in this country was being threatened and there was a sense that Washington was completely out of step and didn‘t quite get it.

And that—you know, that feeling has been exacerbated by the worst economy since the Great Depression. That‘s what we inherited. So the president understands completely where we are. His job tonight is to say where we were a year ago, where we are now and where we‘re going and chart the way to a better future...

MATTHEWS: Yes.

AXELROD: ... that will create jobs, raise wages and give the middle class some sense of economic security. And that‘s what he‘s all about.

MATTHEWS: Well, even for those who sympathize with him and really wish him well and hope he‘s a great, successful president, there‘s a couple of problems. One is avoiding a great depression is a hard thing to show. I mean, nobody wants to draw horror pictures of what it would look like with 17 percent or 25 percent unemployment and a country really going to hell in a handbasket. You just have to reference that, but people don‘t see and feel it.

Number two, they don‘t see and feel these jobs created by the stimulus bill. There‘s no sense of big jobs all over the place, you see people working, working on roads, working on bridges, building things, doing things, going to work, signing up for work. It seems so far that the fear of what we were going to face if he didn‘t do what he did is intangible and the stimulus success seems intangible.

Aren‘t those two challenges he has to address tonight, to make things visible and real to people?

AXELROD: That‘s certainly true. Look, Chris, you make a good point. The economic recovery package saved us from a much broader disaster, and every economist would tell you that. The economy is growing now instead of in freefall, as it was. The job loss has slowed to one tenth of what it was.

But that‘s not very satisfying if you‘re one of the seven million people who lost their jobs in that disaster. And the fact that we‘ve created or saved two million jobs or more is of little consequence if you‘re one of seven million who lost those jobs. And that‘s just—that‘s just the reality of it.

But you know, everybody in this town measures this in terms of the politics of it, and the president isn‘t looking at it that way. His concern is how we get this economy moving again in a way that creates jobs and works for the broadest number of people, and that‘s what he‘s going to talk about tonight. I think people are less concerned about his wellbeing than they are about their own, their families‘ and the direction of the country.

MATTHEWS: OK. Let me ask you about health care. We‘ve got a new NBC poll out, just out last night, that said that 31 percent of the country thinks the president‘s health care plan is a good idea -- 31 percent, about a third, a little lower than a third. But almost half, 46 percent, say it‘s a bad idea. Now, we‘ve had months and months of discussion of the health care bill and all its facets. People have looked under the hood and they don‘t like it. What do you do with that situation?

AXELROD: Well, Chris, we‘ve had this conversation before. I don‘t think they‘re looking under the hood. I don‘t think they know. And I don‘t blame them for it. I think the process has been very tough. The insurance industry has spent tens of millions of dollars to try and form opinions on this. but what is interesting is when you ask people about the actual elements of the plan, they‘re always very positive.

You know, in Massachusetts last week, there was an election that you paid a lot of attention to, and everybody did. One of the interesting things that didn‘t get much attention is that 68 percent of the people who voted in that election said they really liked the Massachusetts health care plan. Well, that was the template for what we‘re trying to do here -- 68 percent. And that‘s why Senator Brown voted for it and why he said he wouldn‘t vote to repeal it.

So I think there‘s plenty of evidence that people like what we‘re—what the plan would do. They simply don‘t know what the plan would do, and fear has—overtaken the situation.

And the only way we can deal with that is go ahead enact reforms that people can see, so they‘ll see what does happen and they‘ll see what won‘t happen. Their fears won‘t be realized. But I think that they‘ll before very pleased to know that if they have preexisting conditions, they get coverage. They can‘t get thrown off if they get sick. There‘ll be a cap on their out-of-pocket expenses. If they‘re a senior, they‘ll get more help with their prescription drugs. Medicare will have 10 more years of life.

There are so many good things that would flow from reform, and I think we should go ahead and move forward on that, and if people in the other party want to say, We‘re going to take that away from you, then let them campaign on that.

MATTHEWS: When you look at the long fight over health care—and the president has fought the good fight over that, and he looks at the total opposition of the Republican Party—absolute Maginot Line there, no support within the Republican Party, even among people who are sort of centrist mainstream conservatives, no help from good people like Michael Enzi out in Wyoming or from Voinovich in Ohio, who‘s retiring, or Collins or Olympia Snowe. Nobody‘s come aboard, certainly not Grassley.

Is there any real hope on the part of the president that he can actually bring those Republicans who are not far-right-wingers aboard a health care plan that would be truly bipartisan and get it done in the next year? Is it possible?

AXELROD: Well, we‘re going to give them that opportunity again, Chris. And you‘re right, there‘s been a political decision, it feels like, from the leadership of the party in Congress to sit on the sidelines in the hopes that if the president somehow fails, if the country fails, that the Republican Party in Congress will win. I think that‘s a very cynical strategy...

MATTHEWS: Yes.

AXELROD: ... and it‘s one of the things that frustrates people. And ultimately, it‘s the American people who are going to compel the Republican Party in the Congress to cooperate. I think the American people said with that vote in Massachusetts what they said with their vote for Barack Obama, they‘re tired of gridlock, they‘re tired of the same old partisan politics in Washington and they want people to work together to solve problems. And if anybody interprets those results differently, then they‘re making a big mistake.

MATTHEWS: Well, let‘s hope that Scott Brown joins the “Let‘s make a deal” party, rather than “Just say no” party. Anyway, thank you very much, David Axelrod...

AXELROD: All right. Good to be with you, Chris.

MATTHEWS: ... who works for the president—senior adviser to the president.

Let‘s turn now to “New York” magazine‘s John Heilemann, co-author of the number one best-seller on “The New York Times” best-seller list, the book “Game Change.” Of course, we‘ve done everything we can here to put that at the top of the list. We‘re waiting for our returns here.

(LAUGHTER)

JOHN HEILEMANN, “NEW YORK” MAGAZINE: And we‘re deeply grateful.

MATTHEWS: Just kidding! No, it‘s a hell of a book. Let‘s talk about tonight. You covered the campaign of the president. Many people think that he was incredibly inspiring in the campaign. I was one of them. Many people believe he‘s been cold as president. Is it the same guy?

HEILEMANN: It is the same guy. And I think—I think the big question right now—I mean, one of the things—if you look at the campaign, in the two big moments when Democrats were panicking, which they clearly are panicking now, in the fall of 2007, when Hillary Clinton was ahead in the national polls by 35 points...

MATTHEWS: I agree. It looked like he was clinching, he was letting her punch him.

HEILEMANN: Right. And in the fall of 2008, right after the Republican convention, when Palin mania was raging and McCain moved ahead a little bit in the national polls...

MATTHEWS: Right.

HEILEMANN: ... Democrats panicked. The Obama people, the president himself and his senior people, they put their head down and said, We‘re not going to panic. We‘re going to hold firm to our course.

MATTHEWS: Right.

HEILEMANN: That worked really well for them during the campaign. The question now is, have they overlearned that lesson, and do they recognize that it‘s possible that a more serious mid-course correction is necessary? Have they let learning the lessons of the past...

HEILEMANN: Well, I certainly think he has to get himself to the point where people feel like he is advocating on their behalf, that he feels their pain, to coin a phrase.

MATTHEWS: OK. Is the answer to that going around the country and doing more town meetings, hanging around in diners, checking in with people? Is it that tangible, just show up, as Woody Allen would say?

HEILEMANN: I think anything that gets him outside of Washington and gets him out with the people of America, and not seeming like he‘s trapped in the swamp here, is a good thing.

MATTHEWS: So if you see him driving a truck down the street tomorrow, like Scott Brown, you‘ll think that‘s a smart move.

HEILEMANN: I‘ll think—then I‘ll think that Barack Obama has become a different person!

(LAUGHTER)

MATTHEWS: Not necessarily a good one. Let me ask you about the Republican Party. They have gained. They have moved up from the skunk hole they were in, about 20 points, up to about 30 points in public respectability, by doing nothing, by just “Nyet-ing”—“Nyet-ing,” as the Russians used to say about deals—No, no, no, no, no, no! And for that they‘ve gone from 20 to 30. Do they think they get back up to 50 with just saying no to this guy and basically screwing every hope he has to solve any problem the country has? Is that a winning game for them, to kill any hope of bipartisanship?

HEILEMANN: They‘re banging their shoe on the desk, like Khrushchev!

MATTHEWS: Yes. Well, that‘s—well, that‘s—that would be active for them right now.

HEILEMANN: Look, there is no incentive right now, given the way the political winds are blowing and given the rewards they‘ve reaped from their strategy of what you could call nihilism. There‘s no incentive for them in the short term, it seems to me—in the short term—for them to be any more cooperative than they‘ve been in the past.

MATTHEWS: How does he tonight hook them—hook them into looking like losers, by saying, I‘m going to offer you the full chance to cut a deal, and they‘re all going to say, Oh, that sounds like a good idea, Mr. President, and then not agree.

HEILEMANN: It has to be more than atmosphere, Chris. I think if he really wants to make that play, if that‘s the play he wants to make, he‘s got to put something substantive on the table that Republicans—a reasonable Republican would agree with.

MATTHEWS: OK. What about going on television, sitting down with Michael Enzi of Wyoming, George Voinovich of Ohio, Susan Collins and Olympia Snowe of Maine, sitting down with reasonable, centrist Republicans and asking them what they want in a bill -- - Chuck Grassley, what do you want in the bill? -- and doing it on television?

HEILEMANN: Put them on the spot. And...

MATTHEWS: Would he ever do this?

HEILEMANN: And say to them, Here‘s a couple things that you want...

MATTHEWS: But you and I know he won‘t do this.

HEILEMANN: ... that I‘m willing to do. Let‘s talk about...

MATTHEWS: Why won‘t he do this?

HEILEMANN: Let‘s talk about medical malpractice. I‘m on your side on this. If I sign on to that, will you guys come on the bill? I would put them on the spot and make them—if this is the way he wants to go...

MATTHEWS: ... the number one cause of high dental and high medical bills is the lawyers, the ambulance chasers.

HEILEMANN: And the White House has in the past expressed kind of token agreement with that idea. I think there are probably four or five ideas like that that they should put on the table, make them answer.

MATTHEWS: How do you create such a deal? How do you create such a forum? How do you get the president of the United States and Rahm Emanuel and his people on one side of the table and the other Republicans—and the Republicans on the other side of the table and do something?

HEILEMANN: He‘s the president of the United States. I think the networks will show up and cover that if he puts it on live TV.

MATTHEWS: And nobody‘ll be able to walk away...

HEILEMANN: Would you...

(CROSSTALK)

MATTHEWS: ... sitting at the end of the table, clapping.

HEILEMANN: It‘d be the greatest piece...

MATTHEWS: Because that‘s what the American people want to see, is some kind of government that works.

HEILEMANN: It would be the greatest piece of political theater ever and it might even work.

MATTHEWS: OK, thank you, John Heilemann. You can see why he‘s the best-selling author of “The Game”—what‘s it called, “Game Change”?

HEILEMANN: “Game Change.”

MATTHEWS: One of the new phrases in American politics, game change.

And it‘s working for this guy, anyway. It‘s changed your game, buddy!

(LAUGHTER)

MATTHEWS: Anyway, State of the Union begins at 9:00 Eastern. You can watch it here. You got to watch it here, the place for politics, MSNBC tonight.

Coming up: The three things I think President Obama needs to do in his State of the Union. This isn‘t genius, but I think you‘re going to agree when you watch. You‘d like to know the answer to those things. Look at the beautiful Capitol building with the sun coming down here in Washington. The building looks great!

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back. So what does President Obama need to say tonight? Well, what does he need to hear—what do you need to hear? I‘ve got a few ideas. With me now to test them, Cynthia Tucker, Pulitzer Prize-winning columnist for “The Atlanta Journal-Constitution,” and MSNBC political analyst Patrick Buchanan.

Here‘s my first idea. First up, President Obama must explain the abyss that faced us. It seems to me, Cynthia and Patrick, his biggest argument so far about why we have a $1.4 trillion deficit right now is we had to spend that kind of federal money in order to avoid this second depression which almost came at us when he took office.

TUCKER: Well, it‘s very difficult to explain because it didn‘t happen.

AXELROD: Right.

TUCKER: And politicians get very little credit for things they prevented. If, in fact, you had seen an unemployment rate go up to 20 percent, banks stop lending completely and supervised (ph) for a year...

MATTHEWS: Hoovervilles.

TUCKER: ... then people would understand. We didn‘t have that happen.

MATTHEWS: So what‘s he do about that tonight?

TUCKER: Well, one of the things he ought to do is talk about George W. Bush more than he has in the past several months. Absolutely.

PAT BUCHANAN, MSNBC POLITICAL ANALYST: What he‘s going to say—what? Look, I came on the field, we were down two touchdowns. Yes, we‘re down four now. I mean, what‘s he going to say? He starts blaming it on Bush. They got to get away from that, Chris. People are sick of hearing it. Bush is gone. He was...

MATTHEWS: But it is a fact that they inherited this horrible situation.

BUCHANAN: We all know that, Chris!

MATTHEWS: They do?

BUCHANAN: That‘s why...

MATTHEWS: Well, why does your crowd on the right always blame him for these deficits?

MATTHEWS: How does he make clear that all this money he spends on job creation, stimulus bills, actually creates jobs?

BUCHANAN: He can‘t!

MATTHEWS: How does he do this, Pat?

BUCHANAN: Here‘s how he does it...

MATTHEWS: I want to see the guy work...

(CROSSTALK)

BUCHANAN: The only way he can do it, Chris, is if we get to November and unemployment‘s at 8.5 percent and it‘s shrinking. He says, We went through the tough times and it worked. It has got to work now. It‘s baked in the cake.

MATTHEWS: Show me the money. I think he‘s got to show us the money actively doing something. The money—all we know is it was bail-out, stimulus. These words mean nothing to people. It sounds like money wasted, peed away on something that didn‘t matter.

TUCKER: A Republican...

MATTHEWS: That‘s how people think of it.

TUCKER: A Republican government in the state of Georgia issued a report today, Chris, that said the stimulus created or...

MATTHEWS: Who said this?

TUCKER: ... saved 20,000. A state report, a state—a report from the state of Georgia. Many of them—which has a Republican governor and a Republican state legislature.

MATTHEWS: There, Pat. There.

TUCKER: Many of those jobs are public sector jobs...

MATTHEWS: OK...

TUCKER: ... teachers, firefighters, police officers.

BUCHANAN: It saved—it saved public employment at the state level, undeniably, and they might get another big boost, send all this money to the states. But frankly, Chris, the states ought to be downsizing, too, because government is too big in this country at all levels.

TUCKER: Police and firefighters should be downsized? I think most people would disagree with you on that, Pat.

MATTHEWS: OK. OK.

Let me ask you about—about something you won‘t be sympathetic to, but I think you will understand the politics of it.

A lot of young people voted for this fellow, this president. A lot of people who never voted before in their life voted for him, for a lot of different reasons. But they thought he was a man of the progressive, liberal side of things, that he had a different attitude toward things like same-sex marriage and gay people serving open, up-front in the military.

Does he have to do something? We understand he is going to do this tonight. He‘s going to call for an end to the ban on open service as a gay person in the military. Is that going to make the left, if you will—nobody likes these terms—but left is fine, right is fine—make them happy?

TUCKER: It will make them happier, because gay activists are furious. But many on the left are furious, Chris, because they believe that the president has not kept his promises.

MATTHEWS: What can he say tonight that...

(CROSSTALK)

MATTHEWS: Well, if they think he isn‘t any good, they have already given up on him. What can he say tonight?

BUCHANAN: What do you think that don‘t ask, don‘t tell—he‘s up there, we are worried about jobs, and he says gays can come out of the closet in the military. What is that going do on the independents and Middle America and the 31 states where they voted against gay marriage?

Is that going to really help him? Everybody is going to see that throwing something to the left. That‘s all it is. I understand it.

MATTHEWS: Doesn‘t he have to throw something to the left? You didn‘t vote for him.

(CROSSTALK)

(LAUGHTER)

BUCHANAN: The left has got—he‘s got to—Obama‘s problem is this. The country thinks he has taken over too much, government has taken over too much. Axelrod was dead wrong in what he said today. Obama didn‘t even talk about health care when he went to Boston. And that guy said, I will kill it.

At the same time, he has got to be a responsible steward of government.

(CROSSTALK)

MATTHEWS: ... was just on. You want to correct him? What did he say wrong today?

BUCHANAN: He said up there in Massachusetts they were voting for the public option. That‘s what they really wanted. This guy said I will drive a stake through that bill, and he surged to victory.

MATTHEWS: Yes.

BUCHANAN: Chris, yours is the party...

MATTHEWS: And, by the way—by the way, Martha Coakley was for the public option, and she got killed.

BUCHANAN: OK. But, Chris, yours is the party of government. I understand that. And liberals want to do more with the government.

But the message from the country now, is you guys are doing too much, taking over too much, and you‘re spending too much. You can‘t reconcile those two. I think he has got to come off as a responsible, tough steward...

(CROSSTALK)

MATTHEWS: Will this freeze idea...

BUCHANAN: It is small beer. Why doesn‘t he just say a freeze on federal salaries?

MATTHEWS: I think it is thin beer, isn‘t it? Small beer.

BUCHANAN: A freeze on federal salaries for two years would be very dramatic, Congress, executive, the entire civil service, three million, two years freeze on federal salaries.

(CROSSTALK)

TUCKER: Pat wants him to be a Republican. That would be a huge mistake. What the president needs to do tonight is show—project confidence and strength and show that he is not walking away from his principles or his policies, including health care.

Pat, you are wrong. Sixty-eight percent of Massachusetts voters are in favor...

MATTHEWS: But the big problem in Massachusetts with that race up there is they have what a lot of people are promising now. They have it.

BUCHANAN: Right.

(CROSSTALK)

TUCKER: And they didn‘t want to pay for it for other people.

(CROSSTALK)

MATTHEWS: They didn‘t want to pay. They didn‘t want to be a donor state.

Patrick, this president, tonight, in terms of tone and presentation, is confidence key? Does he have to walk up...

(CROSSTALK)

BUCHANAN: I agree with my colleague here. He has got to come off as strong, a man that‘s in charge, in control of the government, who knows how bad things are, but we are going to see this through, and this thing is going to work out, folks. It looks rough now.

(CROSSTALK)

MATTHEWS: I think he has got to say a lot of things he feels. If he does feel concern—and I think he does—about people out of work and watching their housing values drop to nothing, and kids can‘t go to college, he better say it.

MATTHEWS: And, also, he has got to find a way of answering the question. If you are going to create jobs, let‘s see them. I want to see people working. Don‘t keep telling me you saved job backstage somewhere.

(CROSSTALK)

MATTHEWS: And don‘t tell me you saved us from a Great Depression backstage somewhere. Put it out front and show it to us. That‘s the job of a communicator.

BUCHANAN: You can‘t do that until the jobs are created.

MATTHEWS: OK. Thank you.

BUCHANAN: But, Chris, what he can‘t come off as is this fighting populist against Wall Street. He is Ashley Wilkes. He can‘t...

(CROSSTALK)

MATTHEWS: I think you got it right. I don‘t think he is an angry guy. I think he‘s not an angry guy. And I don‘t think he‘s—Ashley Wilkes is an interesting...

(CROSSTALK)

MATTHEWS: We will talk about that. You have changed a lot politically. Ashley Wilkes.

MATTHEWS: The latest bugging by the—latest on the perhaps attempted bugging of Senator Mary Landrieu‘s office in New Orleans. What were those guys doing on the phones down there? What were they up to humiliate the senator? What were they doing? They have been charged. They are facing 10 years in prison. For what? What was the motive. We are going to get to that when we come back.

Federal officials have charged four conservative activists with entering Senator Mary Landrieu office down in New Orleans this Monday in order to tamper with the phone system.

Senator Landrieu put out a statement yesterday—quote—“This is a very unusual situation, somewhat unsettling for me and my staff. I am as interested as everyone else about their motives and purpose, which I hope will become clear as the investigation moves forward.”

The Associated Press reporter Kevin McGill joins us right now on the ground in New Orleans with the latest.

Kevin, thank you so much for joining—this is a legal issue. These people have been charged. They have been put out on bail. They face 10 years in prison for a strange kind of charge, entering federal property under false pretenses with the intent of committing a felony.

That seems a bit elliptical. Do you know what the real charge is or what this is all about in terms of the law?

KEVIN MCGILL, ASSOCIATED PRESS: Well, we don‘t know yet, Chris.

It is still a big mystery what the charges are going to end up being ultimately or what their alleged motivations were. They have a February 12 court date as of now. But we don‘t know what is going to happen then.

These charges were made in a criminal affidavit, a criminal complaint by the FBI. There could be a grand—that could lead to a grand jury. It often does. Sometimes, it leads to plea bargains, and we have to leave open the possibility that it could lead to charges eventually being dropped. We just don‘t know yet.

MATTHEWS: It says entering the property with the intent of committing a felony.

What possible felony could they have intended? Within the realm of possibility, what is in there? Was it anything—let me just assume it has something to do with the telephones. They were playing with the telephones. One of the things you can do with a telephone is put a wiretap on it. We don‘t know. What do we know?

(CROSSTALK)

MCGILL: Well, we don‘t know.

The Democrats here in Louisiana are calling this the Louisiana Watergate. That may be premature. It‘s very important to note here that the federal authorities have not said—or have not said at all that there was an attempt to bug or wiretap. They just said tamper with the phone in some way.

Now, we know that these guys have a history of conservative activism and that, of course, Mr. O‘Keefe was famous for the video that embarrassed ACORN. We know that he has been accused of recording what was going on at the office when this was going down. We just don‘t know exactly what he was trying to do. Apparently, it involved some attempt to embarrass Senator Landrieu or her staff. Again, the motivation is still a mystery.

MATTHEWS: Well, is it fair to assume—well, it is hard as an AP reporter to do it. Let me try to assume. If they had been doing something innocent, why wouldn‘t they have said so when the police arrived, when the federal marshals arrived, if they were just doing some college prank, some mischief they were up to?

These people have been charged with felonies, 10-year counts, 10 years imprisonment involved here. Wouldn‘t they have said something if it was something besides wiretapping or something that serious right up front? Excuse me, officers. We‘re just having some fun here. Give us a break.

You don‘t let somebody book you if you have a case, do you, right up front?

MCGILL: Well, they could say anything you want. They were on federal property and there was some indication, according to the affidavit, that they were trying to tamper with the phone in some way.

Why they were doing it, we don‘t know. But once they got on federal property under false pretenses, that is a serious crime. It could be a misdemeanor. But if they do prove that there was an attempt to commit a felony, it becomes the possible 10-year prison sentence that each of them is facing.

Let‘s take a look at an interview right now. This was done by Mara Schiavocampo with the chief person, the chief perp, if you will, James O‘Keefe. He‘s seen as a conservative hero, by the way, for posing as a pimp—that‘s the word they used—someone who puts out prostitutes, last year in secret recordings of the ACORN headquarters.

Let‘s take a look at this discussion between the reporter and the leader of this group as to what he‘s up to in life, what his sort of motivation is.

(BEGIN VIDEO CLIP)

QUESTION: Do you consider yourself a conservative?

JAMES O‘KEEFE, ACTIVIST: I consider myself a progressive radical. I don‘t want really to conserve anything.

QUESTION: How do you define yourself, as a journalist, as an activist?

O‘KEEFE: I don‘t have a business card. I‘m too busy doing what I do.

I let other people frame it the way they want.

I would hope to be able to do more of these types of things and expose more corruption and do more investigating, absolutely.

MATTHEWS: Well, he wants to expose corruption. What do you make of that, Kevin? Does that help us understand the motivation of playing around with somebody‘s phones?

(CROSSTALK)

MCGILL: You know, Chris, one of the possible motivations we have been looking into is, there was a lot of complaint—we all know that Mary Landrieu made her decision late last month to vote for the Senate health care bill.

That was in the middle of her being targeted in the crosshairs by a lot of conservatives as she made the decision to make that vote. There were many complaints on conservative blogs, conservative letters to editors that she was avoiding phone calls for protest, that people would make a phone call to her office and that they couldn‘t get through, that they would go to voicemail and voicemail boxes would be full.

That—again, this is speculation at this point. Maybe that was the motivation. Maybe they were trying to say something about whether her phones were operating correctly or whether she was trying to avoid the issue in that way.

MATTHEWS: OK. Kevin, Kevin McGill, thank you, with the Associated Press down in New Orleans.

Good luck in the Super Bowl. You have got a hell of a quarterback on that team.

MCGILL: Thank you very much.

MATTHEWS: So does the other team.

Anyway, up next, back to the State of the Union. President Obama will likely ask Republicans tonight to join him, to lend him a hand to try to do something together and get some things done. But do Republicans in Congress really want to help this president or do they want to watch him die? The strategists join us next. It is the biggest question, I think, in Washington. Will this city come together and get something done or just play the blame game forever until everybody is in trouble?

Apple shares rallying on aggressive pricing for the new iPad personal computer. It will start at $499 and an unlimited data deal with AT&T is just $30 bucks a month. Shares in AT&T also getting a boost from that announcement, gaining a little bit more than 1 percent.

Meanwhile, the Federal Reserve holding interest rates steady to nurture the budding economic recovery. And a slew of earnings reports today, with more companies beating expectations, but tempering their full-year outlook, Caterpillar among them, shares falling more than 4 percent.

Boeing as well, but shares there up more than 7 percent. And telecom giant Qualcomm in the same boat. Its shares are moving sharply lower after-hours.

That‘s it for CNBC, first in business worldwide—now back to

HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

What can the president do tonight to get his message back on track and how can Republicans build on the post-Massachusetts momentum, should they choose to do so?

It is time now for our strategists, left and right. Steve McMahon is a Democratic strategist. Todd Harris is a Republican strategist.

Steve McMahon, the president tonight, how does he win tonight? How does people—let‘s make it simple. How does he succeed tonight?

STEVE MCMAHON, DEMOCRATIC STRATEGIST: He—by communicating to Americans that he feels their pain and he understands what they are going through.

I think the first year of his administration is a story of the 401(k). People can look at their statement, look at where it was a year ago, and they can see that great progress has been made because their stock portfolio has improved considerably and their retirement security is better than it was.

But it is not all the way there yet. The president needs to lay out the case for taking the next step on the economy, creating new jobs, and he needs to lay out some things that are going to be hard for the Republicans to say no to, like small business tax credits and incentives to create jobs.

They‘re going to have to say no to those things. I think their strategy is to say no to those things. And I think it is a bad strategy that will blow up on them later.

MATTHEWS: Let me go to Todd.

Todd, by the way, before you go to your strategy, why has the economy

rather, the stock market, been going up? Under your guy, Bush, it was dying. It dropped down about what, how many points, down to 6000 from 13000. Really, the Dow almost went in half under Republican supposedly pro-business management.

And then, under a Democratic president, who is a moderate to liberal president, it has gone up 2000 points. Explain. Why does the market do better under a Democrat than a Republican?

MATTHEWS: OK, Todd. Todd, I obviously made a mistake of asking you a tough question. You changed the question.

Let me ask you, what do you think the president should do tonight, as a political pro, regardless of party affiliation? What should he be doing tonight?

What should your party being doing?

HARRIS: Well...

MATTHEWS: I‘m sorry. You‘ve got a governor tonight. He is going to be speaking in Richmond, to the assembly down there of the State Assembly in Richmond, Virginia. He is going to be trying to act like a little president down there. Is that smart to try to reconstruct the State of the Union when you are not the president?

HARRIS: They are not reconstructing the State of the Union.

MATTHEWS: They are. Snoopy trying to play the Red Dragon. Give me a break. How to you go on national television on the night of the State of the Union, speaking to an assembly like it is a Congress, pretending that you are president when you‘re not.

MATTHEWS: He is going to be speaking from outside of Washington, where frankly the majority of Americans live. The values that he‘s going to be representing, the values that got him elected in Virginia, a state that Barack Obama won, which then turned against the Democrats, those are the values that Governor McDonnell is going to be talking about tonight.

If the president wants to appeal to the kind of voters that Democrats have been losing, he‘s going have to show that he learned the lesson of Massachusetts. He is going to have to move to the center. Republicans are more than willing to work with this administration. But whether it‘s been the stimulus, whether it is spending, whether it is health care, the Democrats have said, this is the way that it‘s going to be. It is our way or the highway, and you can either sign on to a liberal bill, or if you don‘t we are going to say you are the party of no.

Chris, I was listening to your conversation earlier. President Obama‘s biggest problem is not with the Republicans. It‘s with people like Nancy Pelosi, who just today—the president said he wants a spending freeze. Pelosi has already come out against his spending freeze. Before people start pointing fingers at the Republicans for things not getting done in Washington, the Democrats ought to take a look at their own house.

MCMAHON: Todd, what you just described is Barack Obama governing from the center. Not every liberal has been happy with what the president and his administration has done. There was a little out-rising this week about Ben Bernanke. There are a lot of liberals who don‘t like the spending freeze. They‘re a lot of liberals who don‘t like where the president ended up on health care reform.

He is trying to govern from the center, Todd, and from the center out, and he‘s inviting the Republicans to join him, which he‘s going to do again tonight. Every time he extends his hand to the Republicans, the Republicans smack it. I understand that it is an electoral strategy that they‘re pursuing. I don‘t think it‘s smart. If you look at the polls, 93 percent of Americans think there is too much partisanship and not enough cooperation in Washington. When the president extends his hand and the Republicans swat it, when they don‘t produce a single vote for a health care reform bill and they only produce three for an economic stimulus package that saved this country from a Depression, the voters will figure it out.

MATTHEWS: OK, let me ask Todd, an expert, what was the message from Massachusetts? I mean, define it really sharply, not just right wing. Massachusetts is not a right wing state. What is it that they were saying when they voted for a guy in a truck? What was that all about, the guy with the truck, wearing the barn coat, who is a lawyer, lives out of town, didn‘t have much political experience? What were they voting for with that guy?

HARRIS: They were voting for someone who speaks for them and who listens to them. They were voting for an outsider, someone who was going to go to Washington to be a check and a balance on the Obama Democratic agenda. They do not—they were not voting for a rubber stamp.

If you look at the polling in Massachusetts, and you ask people who do you think is more likely to be an independent voice for Massachusetts, Scott Brown won that question by a two to one margin. Coakley‘s problem was she had the entire Democratic establishment tied around her neck. In a year, as we talked about before on this show, when the outsider reigns supreme, you don‘t want the entire establishment tied around your neck. That‘s going to be the Democratic party‘s biggest problem this November.

MCMAHON: Todd has actually finally stated something that is true and accurate. That is that there was a big outsider vote that propelled Scott Brown to victory in Massachusetts. The voters are angry. They want Washington to do it differently. The president, so far, hasn‘t been able to change the tone. He hasn‘t been able to reduce the partisanship, because the Republicans refuse to cooperate.

The American people expect it. By a two to one margin, according to the NBC poll recently, they‘re voting—they are blaming Republicans for the obstruction and for saying no, by two to one, over President Obama.

This is not an ideological vote. This is an I‘m mad as hell vote. If you don‘t hear me now, you will hear me in November. Everybody who doesn‘t understand this—it is not ideological. It is not left/right. It is inside/outside. If you are an insider, you are toast in this environment.

MATTHEWS: I agree with you. Anyway, Steve, I think the fact is the president would like to cut a deal with some moderate Republicans right now, maybe ten senators, and find something in the middle, even if he has to deal with tort reform, something Republicans want. I think he really wants a deal now. I‘m not sure the Republicans are not so horny for victory now that they don‘t want to deal with anybody on the Democratic side.

Thank you, Steve McMahon and Todd Harris.

Up next, Sarah Palin is scheduled to give the keynote address at the Tea Party Convention next weekend for 115,000 dollars, but the convention is coming apart at the seams, with bickering over how much she is getting, how much they have to pay to get in there. There may be empty seats. By the way, why do you political conventions which are for profit? Why do you get paid over six figures to give a speech at a political convention? This is certainly free enterprise.

MATTHEWS: Back to HARDBALL. The House Speaker Nancy Pelosi, in a session with reporters, including cNBC‘s John Harwood, said today that she believes she can get enough votes to pass the Senate health care bill if changes are passed in a separate reconciliation bill.

We‘re back with the politics fix, with David Corn, Washington bureau chief for “Mother Jones” Magazine, and Joan Walsh, editor in chief of “Salon.”

Let‘s, for a little fun here, as we approach the State of the Union tonight, go after the issue of another big speech. That is Nancy—I‘m sorry. What‘s her name, Palin—Sarah Palin, She gets paid more than the president. She‘s going to gets 115,000 dollars just for one speech. She is going go to an event in Nashville where it is going to costs 349 dollars to get in the door to a dinner. If you want to stick around beyond dinner, it‘s going to cost you 149 dollars. This guy running the thing down there knows how to run a political party. Tea parties cost money.

DAVID CORN, “MOTHER JONES”: The problem is that it may not be making money. The issue is—I‘ve got to give credit to Stephanie Mensimer (ph), one of my reporters at “Mother Jones,” who broke the story today, that the guy who is running this is not selling enough tickets to cover the 115,000 dollars he‘s giving to Sarah Palin.

MATTHEWS: He‘s also had a few tax problems.

CORN: He‘s got tax problems. People—

MATTHEWS: He‘s had a bankruptcy problem.

CORN: Your favorite House member, Michele Bachmann, was supposed to speak at this convention, too. She‘s now reconsidering.

MATTHEWS: Well, after she sees what Palin‘s getting.

CORN: And she‘s getting bupkiss. She‘s very upset about this. The real issue is what is Sarah Palin going to do now?

CORN: Nothing. What is Sarah Palin going to do about this. Tea Party activists are calling on Sarah Palin to boycott this for profit event that probably won‘t make a dime.

MATTHEWS: What was it, Lenin said that the capitalists will sell you the rope to hang them with. It seems like here—Joan, you must love this. This is so rich. They can‘t even have a political movement without grabbing a quick profit out of it. Your thoughts?

JOAN WALSH, “SALON”: Exactly. “Mother Jones” did great work on this story. We‘re jealous of “Salon.” You know, I forget who said it, Chris, but there‘s that great old saying that political ideas start as a movement, turn into a business, and end as a racket. The Tea Party movement have made that arc really quickly. This guy thinks he‘s onto something, but it seems like he‘s not.

The really cool question for Sarah Palin is, what is she thinking here? Bill Clinton, he has cashed in on his presidency. He makes a lot of money for speeches. But he didn‘t do that for 20 years. For 20 years, he went to any venue that would have him. He spoke for free. He shook the hands.

Sarah Palin doesn‘t seem to really have the taste for that. There was talks along the route of her book tour that she would just close off shop before she signed enough books. There would be people in lines. And she actually angered some of her fans. So she‘s really not showing a taste for retail politics. She‘s looking like she‘s somebody who really wants to get rich quick. More power to her.

MATTHEWS: What about conservatives, true believers, Joan—you stay on this—true believers on the conservative side of things must be appalled that somebody is exploiting them, somebody who they think really cares and cares about less government, less taxes, less influence in our lives with big government, who truly believes that; and now they see someone who they felt was a fellow believer coming in and making a bank roll off their shared belief. How can they like her after that?

WALSH: I don‘t think they can. I don‘t think they can. Stephanie, in the story, did a great job of finding some of those true believers who are really angry, and didn‘t join this movement so somebody, whether Sarah Palin or the convention planner, could make a buck. They‘re in this movement to change the country. I may disagree with some of their positions and their methods, but there are a lot of really sincere people in this movement.

CORN: Chris, you know they are—sorry, Joan.

MATTHEWS: Go ahead.

CORN: What they are serving for dinner at this banquet that she‘s speaking at, steak and lobster.

MATTHEWS: That‘s why they‘re not making any money. Let me tell you one thing, I like coffee. I‘ll be right back with David Coin. I said Coin. I‘m thinking money here. Thank you. And Joan Walsh. We‘ll right back to talk about the big speech tonight. Can the president show resolve tonight? Can he lead? You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We‘re back with David Corn and Joan Walsh. Joan, what should the president do tonight to reassert his leadership of this country?

WALSH: I think he should come out and call for the passage of a strong health care reform bill. I‘m afraid that he won‘t. I hope that he does.

Chris, I cannot sit here and watch this president potentially walk away from a year of work. If Democrats do that, they are toast. They‘ve shown that they can‘t govern.

After all that‘s been put into it, it‘s probably going to be a bill that I‘m not thrilled with. But they have to do something. So I would like for him to call on finishing the job on that. And then I don‘t want to see him pull a Joe Wilson and call them liars. I want to see him speak with dignity and respect.

But I don‘t have a lot more patience for bipartisanship, because what he needs to do is get stuff done. And being bipartisan, I‘m sorry, it doesn‘t get anything done. They‘ve tied him in knots for a year, so I think he needs to look for strategies where he can get things done. He can create jobs without Republican votes.

They stiffed him on the stimulus. They stiffed him on health care. Let‘s get moving in this country. We‘re at serious risk if we don‘t do more. I don‘t want to hear the talk.

MATTHEWS: Executive order? How is he going to do this? We have a constitutional system where Congress controls spending money. It spends money. Congress does, not the president. The president doesn‘t have a nickel, except for his salary. How does he do this?

WALSH: He does as much as he can get done with Democratic votes.

They‘ve been acting since Scott Brown won like they lost the majority. They just lost the super majority, which wasn‘t very super in the first place, which included Joe Lieberman. They‘ve been acting like scared animals. Go ahead, David.

MATTHEWS: I don‘t know what that means, Joan. Joan, you made a compelling case, but I still don‘t know what you mean. I don‘t know how you pass a health care bill without getting more Republicans to join it. I don‘t see the numbers.

WALSH: There are lots of ways.

MATTHEWS: Who says? How do you get it passed the Senate? How do you do it?

CORN: You get 51 votes for reconciliation.

MATTHEWS: You going to get Harry Reid to do it? You going to get Durbin to do it? Who is going to do it?

CORN: Yes, Harry Reid—if Harry Reid can get the 51 votes, that‘s how you do it, which seems a better chance now than getting 60.

Let me take issue—disagree a little bit with Steve McMahon who earlier on the show said that Obama needs to come out and feel the voters‘ pain. I don‘t people want to have their pain felt. They‘ve been touched enough already by this economy. What they want to do is they want to see Obama actually come out and fight for them. You and I were talking about this earlier. What does it mean to fight?

MATTHEWS: I do want to know. Is it a metaphor? Does it mean punch somebody?

CORN: I‘ll tell you. Obama the last week has come out, again and again, in Twitters and speeches and in his weekly address and says, I‘m fighting for the middle class. This is his metaphor, over and over again. Saying we‘re fighting doesn‘t mean anything. But he has to show—he has to take the Republicans on, the insurance industry.

MATTHEWS: Because you‘re seeing it‘s not getting done. Have you noticed? Special live HARDBALL coming back one hour from now. Watch President Obama‘s State of the Union, here at the place for politics, 9:00 Eastern, right here on MSNBC. Right now it‘s time for “THE ED SHOW” with Ed Schultz.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.